The Financial Industry Regulatory Authority (FINRA) brought a record number of enforcement cases in 2011—approximately 1,500—and is on pace to bring just as many cases in 2012.
While FINRA has heard complaints that it has failed to take a tough enough stance on larger firms since the 2008 financial crisis, Brad Bennett, head of FINRA’s enforcement division, said at FINRA’s annual conference in Washington on Tuesday that’s “just not true. There’s no way we haven’t gone after the big firms.”
In 2011, approximately 33% of the large firms faced an enforcement action while less than 5% of the small firms faced an action.
FINRA is “running within a couple percentage points now” in terms of the number of cases it brought in 2011, Bennett told AdvisorOne on Wednesday.
What Your Peers Are Reading
Dishonesty and unapproved outside businesses are two of the top areas where FINRA’s cases have been focused.
Approximately 170 of FINRA’s member firms are considered “large” firms with 500 or more reps, while about 4,000 are considered “small” firms with between one and 150 reps.
But just because large firms may be sanctioned in a “disproportionate number of cases, that doesn’t mean that FINRA is treating large and small firms the same, or is being tougher on larger firms,” Brian Rubin, a partner in the Washington office of Sutherland Asbill & Brennan, told AdvisorOne.